Nova Scotia's Due
National Post Editorial
Wednesday, June 13, 2001

The Nova Scotia government has an agreement, signed with Ottawa in 1986, that makes the province the principal beneficiary of any oil and natural gas development in the waters off its coast, until its economy surpasses the national average. As things stand, the province is far below the national average. Yet last year, its share of royalties and corporate income taxes from off-shore exploration and production was only 19% -- compared with Ottawa's 81%. John Hamm, the province's Premier, wants what his province was promised. If the current distribution of royalties persists over the next three decades, the expected lifetime of the province's gas beds, the Nova Scotia government will come ahead only about $200-million a year, while Ottawa will rake in nearly $1-billion annually.

Unfortunately, Nova Scotia has no constitutional leg to stand on. The Constitution Act of 1930 ceded subsoil mineral rights to the provinces, but not offshore ones. Still, the Canadian government has consistently pledged to uphold Nova Scotia's claims. In June of 1984, the parliamentary secretary to Jean ChrÈtien, then the energy minister in Pierre Trudeau's Cabinet, told the Commons his minister would ensure that "until Nova Scotia's per capita fiscal capacity reaches 110% ... the province will receive all offshore revenue." "All" certainly doesn't sound to us like a 19/81 split.

In fact, technically speaking, the province does receive all royalties. But Ottawa claws back about four-fifths of them from the equalization payments it sends to Nova Scotia every year. This backdoor royalty grab is a surefire method to discourage Nova Scotia from developing its new-found resource wealth. Ottawa's refusal to honour both the letter and the spirit of the 1986 Canada-Nova Scotia Offshore Accord will keep Nova Scotia dependent on the rest of Canada
-- stuck in a province-wide welfare trap.